Oral Testimony of John Craig, August 1999 - Center for Professional Responsibility

Oral Testimony of John Craig,president-elect of the Inter-Pacific Bar Association,Before the American Bar AssociationCommission on Multidisciplinary PracticeAugust 8, 1999Atlanta, Georgia

John Craig, president-elect of the Inter-Pacific Bar Association, was the next speaker. He candidly admitted that the movement to MDPs really began in the European domain and is slowly, inexorably moving west and will not get to Asia for some years. Thus, the Inter-Pacific Bar has had no discussions and no views on the subject that are publicly available. He had, however, talked to numerous people in Canada and commented that the Canadian Bar Association and the Law Society of Upper Canada, both of whom have presented to the Commission, represented two sides of this coin much as the ABA and the New York State Bar seem to represent the two sides of this debate in the United States. His latter discussion was with representatives of Ontario who have a decidedly less advanced view than has been expressed by the ABA. The ABA Report indicates that MDPs can be successfully implemented with appropriate safeguards to ensure core values of the profession are not compromised. The Upper Canada Law Society report looks at the issue in reverse. The core values of the legal profession are important and can only be implemented if the MDP offers legal services only (the Washington D.C. model) and is controlled by lawyers (New South Wales model, that is subject to change momentarily). He suggested Professor Daly might want to talk to representatives of New South Wales regarding the changes that are coming. Most of his comments were in the form of questions. Is the Ontario position focused on the preservation of core values or is it really a protectionist ploy? Does the ABA position really protect core values or is it simply responding to the inevitability argument that it is going to come, let’s deal with it and do the best we can? His key issue is whether this is going to be an erosion of the key core or essential values, or really a needed paradigm shift to reflect the realities of globalization? He admitted he had clients in the corporate field who have indicated that they do not feel it is necessary to have one stop shopping, they prefer to have a broader base of professional advice. Other of his midlevel clients see that there might be economies from MDPs and prefer that. He said it is hard to determine what is the bottom line for most of these clients; they just don’t have a feel for the issues but are concerned that their consumer interests be protected. The question really is, are the status quo arguments designed to protect those consumers of legal services, or are they a product of inertia, an attempt to circle the wagons to protect lawyers? Another question is what is wrong with a parallel partnership concept? Toronto has the captive law firm of Ernst & Young called Donahue and Partners. The captive law firm is allowed by Law Society rules because it is controlled by lawyers, run by lawyers and does not share profits with, but lives within the bowels of, Ernst & Young. Another movement in Canada is the intellectual property firm that is affiliated with trademark and patent specialists; the question is whether they would be a successful alternative to MDPs. He recognizes the extensive work that has gone into preparation of the Commission Report but thinks there are unresolved questions that should be addressed before reaching final conclusions. He commends the Chairman’s intent to defer the resolution for further consideration. As he retains real concerns about the protection of core values he raised three areas of consideration: 1) Independence of judgment is fundamental. The Report, in the view of some almost nonchalantly, concludes that independence has been maintained in corporate law departments and government offices. By way of reiterating a previous speaker’s comments he said he knew of many corporate counsel who feel very much under the gun as employees of the corporation in coming to conclusions on legal matters and legal concerns about a transaction, and are concerned about being obstructionist or being viewed as obstructionist. The parties in an MDP may view lawyers as obstructionist. 2) Preservation of confidentiality, a lawyer’s obligation to take reasonable care to prevent disclosure of client information, raises other questions. What happens in the event lawyers are dealing on a daily basis with accountants or financial consultants or financial planners or others who are not subject to the same strictures and do not have that same sense of confidentiality? Are lawyers vicariously responsible for the action of others? What is the impact on the solicitor-client or attorney-client privilege? What happens if the information given to lawyers is passed on to nonlawyers? The view of the Supreme Court of Canada in a couple of cases is that the privilege is waived. How can lawyers deal with this; is disclosure and client waiver sufficient? 3) Lawyers approach conflicts of interest in a unique and special way. Accountants and other advisers don’t respond to the conflicts issue in the same way as lawyers who protect client confidentiality. He thinks these issues remain to be dealt with in a more significant way as the Commission comes to its conclusions.

Mr. Wander asked him whether those same concerns regarding independence, confidentiality and other core issues being adversely affected don’t exist today with 1,000-1,500 partner independent law firms with large clients? Mr. Craig said there are obvious dangers of that kind in any law firm of any size but there is an obvious obligation endemic to a lawyer’s professional status. Solicitors in Ontario are subject to Law Society rules and breach of confidentiality is a serious issue that there are ways of dealing with as a lawyer. There are not ways of dealing with that issue as an accountant or as a financial consultant. Asked whether the Commission’s proposal doesn’t address this concern by bringing those who are perhaps practicing law under the tent of the ethical values, Mr. Craig said filing an undertaking in Ontario with the Supreme Court, or even the Law Society, wouldn’t bring others under the purview of the control mechanisms unless they were lawyers.